Lawmakers move to nullify proposed white collar rules

Republican lawmakers on March 18 introduced legislation that would require the Labor Secretary to nullify the Labor Department’s controversial proposed rule defining and delimiting the so-called “white collar” exemptions for executive, administrative, professional, outside sales, and computer employees. Introduced by Senator Tim Scott (R-S.C.) (S. 2707) and Representative Tim Walberg (R-Mich.) (H.R. 4773), the measure would also require the Secretary to conduct a specified economic analysis on employers before promulgating any substantially similar rule.

The Department of Labor’s proposed rule would revise the white collar exemption that establishes the threshold above which employers are not required to pay overtime. The proposal would more than double—from $23,660 to $50,440, as projected for 2016—the current floor below which the white-collar exemptions from overtime would not apply.

Regulatory action nullified

Specifically, the legislation proposed by Republican lawmakers would render the proposed white collar exemption rule without force or effect. If a final rule is promulgated prior to the enactment of the proposed legislation, the Secretary would be barred from enforcing the rule based on conduct prior to the date of the legislation’s enactment, and any rules amended by the final rule would be restored as though the final rule had never taken effect.

Economic Analysis

The Republican proposal would require the Secretary, before promulgating any substantially similar rule, to conduct an economic analysis on small businesses, nonprofit employers, Medicare- or Medicaid-dependent health care providers, small governmental jurisdictions, and all other employers, and minimize the impact on those employers, according to its sponsors.

Limitations on any new white collar exemption rule

Moreover, the proposed legislation would place substantial limitations on the both the substance and rulemaking process for any future white collar exemption rule. It would bar any new white collar exemption rule from including a provision that would automatically update the salary threshold. The notice and comment period for a new proposed rule would be set at not less than 120 days. The nullification proposal also bars any modification to the duties tests unless the modification has been included in an initial proposed rule—notably, not the case with the DOL’s proposed rule to date.

More balanced and responsible approach

According to its Republican sponsors, the Protecting Workplace Advancement and Opportunity Act legislation would ensure that the DOL pursues a balanced and responsible approach to updating federal overtime rules. With the release of a final rule on the current proposed white collar exemption rule expected in the coming months, the Republican lawmakers said their proposed legislation would:

• Prevent the DOL from finalizing a proposal that will limit opportunities for employees and place significant burdens on job creators.
• Require the DOL to fully and accurately consider the economic impact of any rule on small businesses, nonprofits, institutions of higher education, and others who will be affected.
• Ensure future changes to the salary threshold accurately reflect the economic realities facing workers and employers by making clear automatic increases are not allowed under current law.
• Promote transparency and accountability by requiring any changes to the duties tests be made available for public review and comment.

The lawmakers also cited concerns that the DOL’s proposed rule would result in workers having less flexibility and less opportunity for advancement in the workplace. Further, some have complained that the proposed rule would raise costs on small businesses, “while doing nothing to streamline a complex and outdated maze of overtime rules.”